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Modelling financial satisfaction across life stages: a latent class approach

Sarah Brown (), Robert Durand (), Mark Harris () and Timothy Weterings ()
Additional contact information
Robert Durand: School of Economics and Finance, Curtin University
Timothy Weterings: Department of Econometrics and Business Statistics, Monash University, Australia

No WP1403, Bankwest Curtin Economics Centre Working Paper series from Bankwest Curtin Economics Centre (BCEC), Curtin Business School

Abstract: We explore the determinants of financial satisfaction using a modelling framework which allows the drivers of financial satisfaction to vary across life stages. Given that financial satisfaction is measured as an ordered variable, our modelling approach is based on a latent class ordered probit model with an ordered probit class assignment function. Our analysis of household survey data indicates that four life stages are supported by the data. Our results suggest that such flexibility is important in understanding the drivers of financial satisfaction over the life cycle since there is a substantial amount of parameter heterogeneity across the four classes.

Keywords: financial satisfaction; latent class; life cycle; ordered probit. (search for similar items in EconPapers)
JEL-codes: C3 D1 D6 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2014-05
New Economics Papers: this item is included in nep-dcm
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